Orantes Company's times interest earned for 20 × 6 was closest to:

Question

Quizplus · Accepted Answer

To calculate the times interest earned ratio, we divide the earnings before interest and taxes (EBIT) by the interest expense.

We do not have the exact EBIT and interest expense figures for Orantes Company, but we can make an estimate based on the answer choices.

If we assume that the company's EBIT was $100,000 in 2016, then we can calculate the interest expense needed to achieve each of the answer choices:

A) Times interest earned of 10.0 = EBIT / (interest expense of $10,000) 
B) Times interest earned of 14.3 = EBIT / (interest expense of $7,000) 
C) Times interest earned of 15.3 = EBIT / (interest expense of $6,536) 
D) Times interest earned of 25.3 = EBIT / (interest expense of $3,953)

Out of these options, the closest one to a times interest earned of 20 would be C) 15.3 times. Of course, this is just an estimate and the actual times interest earned may be different based on the company's exact financials.

Orantes Company's Times Interest Earned for 20 × 6 Was